Any railroad sales people here? I’m curious to know how the railroads drum up business. I read an article in Trains recently about the Finger Lakes Railway and how they attribute much of their sucess to sales and marketing.
It depends the type of railroad you have in mind. The Class I railroads are in a position where 250-300 customers pay 80% of the freight bills. This leads to promoting their service with salesmen. Salesmen are expensive but when a customer generates $1 million to $100 million in annual sales it is the most efficeint way to promote the product. It also leads to a view that small customers should be served through third parites much as Toyota will not sell you a car but they will send you to a dealer who will sell you a Toyota. Likewise railroads will serve small shippers through UPS, J B Hunt, Schnieder, PACER and other third parties.
Taking a look at old Official Guides from the 60’s/70’s the railroads employed a large number of sales reps. That number seems to have diminished over the years.
It seems that railroads “wholesale” their intermodal business for the most part. Is this accurate or not?
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First, the Class I case. Existing customers have an account manager at each of the Class Is they work with – or multiple account managers if they are shipping different commodities that lap into different areas. For example, a cement plant has an account manager in the industrial products group that handles the cement, and an account manager in the industrial section of the coal group to handle the coal supply. The account manager visits the customer, discusses future business plans and opportunities, and assists in negotiating contracts. The account manager brings in the industrial engineering representative if the customer wants to revise or expand its track arrangement and connection with the Class I, helps the customer arrange for car supply, and assists in pricing and service terms. The trainmaster keeps tabs on the customer too, and discusses switching and service needs, and alerts the account manager or industrial engineer as necessary. The Class I account manager will alert customers to new opportunities and facilitiate existing customers meeting with new receivers or shippers, whichever applies. For example, a new industrial customer approaches the railroad with a need for coal. The account manager will give the customer the names of all the mines that might be appropriate for the customer, and make initial contact with the coal mines if so desired.
The Class III case is identical except one or two people will handle all the marketing and sales, such as a local representative that handles daily business for a specific shortline and a regional representative that supervises the local reps on several shortlines in a region, and helps the local rep with big or new customers.
Transportation is a service business. That means you pay close attention to the customers needs and propose a solution that exceeds the competition. Telling the cutomer you will take five times as long or longer than a truck for a container or carload and he has to pick it up at the railroad since he doesn’t have a siding better have one heck of a price to convince him to use rail. What else do you have to offer? Now if you have five million tons of something you can move it faster and in higher volume than any trucking company around plus your variable costs just dropped to the minimum making you not only able to give him a good solution you can make money doing it. You learn early on in sales that if all you can offer is price you don’t have the foggiest idea of the value of your service nor what the customer wants plus you have just minimized your product or service value and thus minimized your return.